5 Operations Management Flashcards
Explain
Triple bottom line
Businesses need to take into account
• Economic
• Social
• Ecological factors,
to be sustainable
What is meant by Continuum of goods and services?
Only few businesses are goods or services only, most are a combination of both, some with high service, some with high physical content.
Products for instance often come with after – sales service (warranty repairs). A hairdresser (service) may apply some hairspray (product)
Provide one example for
• Economic
• Social
• Ecological
Sustainability
- Economic: - Avoiding waste
- Social - Provide safe work conditions
- Ecological - Avoiding pollution
Define
Cell production
What are the main advantages? (Also called cellular manufacturing)
a form of mass production in which the flow is broken up by teams of workers who are responsible for certain parts of the line
- Higher motivation
- Required cooperation of cells lead to better quality and less waste, hence lower cost
What is the difference between
Mass production and Batch production?
Mass production refers to economy of scale productions, where always the same product will be produced. (e.g. fast moving consumer goods such as Coca-Cola)
“Batch” refers to production of a group of identical products, which – after one batch is produced – is customized, but still produced with the same recalibrated machinery. (e.g. cars that come with a big variety of options.)
What are advantages and disadvantages of
customized job production
Advantages
- Mark-up (gross-profit-margin) is likely high
- Client gets exactly what they want
- Motivates skilled workers, no boredom, flexible
Disadvantages
- Expensive production method T
- ime consuming, also with the client
- Labor intensive and reliant on skilled workers
What should a company consider before they
Change production method
Changing production method has implications not only for operations itself, but for all business functions:
HR – retraining, employees with different skills needed, release non-suitable workers
Finance – change is costly and need to be financed , may interrupt the production and therefore cashflow and working capital cycle
Marketing – product may change by the method, affecting the image of the brand , change of cost may affect the product price
What are the main aspects to be considered before deciding about the
Method of production
- the target market – for example, the business may be producing a high volumes of a low-cost product for a very large market with little disposable income
- the state of existing technology – this can limit how flexible production can be
- the availability of resources – fixed capital, working capital, and human capital
- government regulations– for example, a business may have to meet certain targets for recycling or waste emissions.
Lean production is mainly about avoiding waste.
Which forms of waste can occur, that can be avoided?
● time (waiting for the next stage of production, or waiting for some elements to arrive)
● transportation (the movement within the factory or outside from subcontractors)
● products (defects that need to be scrapped)
● space (too much stock needs space)
● energy (under-utilization of some machines, or old energy-inefficient machines)
● talents (not using workers’ skills and knowledge).
Which are the three
types of resources in which waste can be avoided?
- Physical (material, fuel, space, machines, etc.)
- Human (unproductiveness, idle time)
- Financial (holding stock, tying capital not used elsewhere)
What are (four) methods of
Lean Production?
Explain.
- Kaizen – continuous improvement (corporate culture to always improve processes in learning cycles.)
- Just – in – time (avoiding stock to get supplies only when necessary
- Kanban (cards describing step by step the production process to individuals)
- Andon (automated signals, improving effectiveness)
What is
Cradle to cradle design and manufacturing
Products are designed to be fully recyclable.
Avoids physical waste, often in line with energy savings and CSR –criteria.
Link to sustainability policy : economical, social, environmentally friendly
What is the difference between
Quality Control
and
Quality Assurance?
Quality control is exerted by a a person looking over the production process. Associated with mass production, the job is stopped if there is a quality issue.
Quality assurance is overall control over the process starting with suppliers and incl. after sales services. Associated with cellular production.
The term
quality
suggests that a
product has which (5) features?
- reliable
- Safe
- Durable
- Innovative
- Value for money
What is the main feature of
Total quality management
And what are the main advantages and disadvantages
TQM is an approach to quality enhancement that permeates the whole organization. (not only production)
Advantages:
- Enhances reputation
- Safe cost on the long – run
- Improves the product quality
Disadvantages:
- Cost in the short term
- Difficult to maintain over long
What are factors to be considered when choosing
Location for business
- Cost
- Competition
- Types of Land
- Markets
- Labor Pool
- Infrastructure
- Suppliers
- Government (Laws and Taxes)
What types of
existing infrastructure
should be considered when choosing a
location for business?
- Transport networks for people and products
- Electronic networks
- Others which may be important e.g. for employees:
- Education , healthcare, security,
What is
Cannibalistic marketing?
Branches located so close that the new branch takes away customer from the other and eats up their profit.
To save transport cost should a business
- go closer to the market
- or to the (raw) material they are using?
If bulk decreasing (small end products form large quantities of raw materials) closer to the source. (e.g. paper mill)
If they are bulk increasing (e.g turn many small components to a bigger one , closer to the market .
What are examples for a
regional trading bloc?
EU or NAFTA
Several states between which there are no trade barriers (e.g. import fees) and which have together the same rules with other countries or blocs.
What are the
Pull factors of globalization
?
External factors that pull a company abroad:
- Improved communications
- Dismantling of trade barriers
- Deregulation of the financial markets
- Increasing size of multinational companies
What are the
Push factors of globalization
?
Internal factors that push the company out of their home country:
- Cost reduction
- Increase market share
- Use extension strategies
- Use defensive strategies
Define
Outsourcing and Offshoring
the practice of employing another business (as a third party) to perform some peripheral activities
but not the core activity of the company
e.g. transport, catering, training, cleaning
What is the main reasons for
Offshoring
and what are the major risks?
Reason
Reduce costs – other companies, specialized in the peripheral activity, can provide them cheaper due to economy of scale effects
This can improve capital utilization and delivery time and enables Focus on core products
Risks:
- Dependency on supplier
- Less control over the product (if production is outsourced partially)
Describe
Supply chain process
The supply chain refers to the wide system of connected organizations (for example suppliers), information (such as orders), resources (for example raw materials), and operations (for example transport) that a business needs
What are the
two flows
that need to be managed in a
supply chain?
- Material (Logistics)
- Information and communication (from supplier to manufacturer to end customer and back)
What is the main difference between
JIT – Just in time and
JIC – Just in case?
JIT tries to avoid holding any stock (e.g. saving money for warehouses and optimizing cashflow)
JIC holds raw material and finished product to avoid that sudden customer demands cannot be met. (by which also money would be lost.)
Economic order quantity (EOQ)
Enables to calculate the optimized amount of stock to be ordered, by comparing
Cost of stock out
Cost of holding stock
How does the graph look like ?
How does
lead time
affect the
reorder quantity or the reorder level?
If the lead time is longer the reorder has to be initiated earlier – therefore the reorder level of stock is higher at the time of the reorder. The reorder quantity is not affected.
What are four factors having an impact on the
Optimal level of stock?
- Market – is it growing or shrinking
- Product – fast moving, single use etc.
- Stock – perishable (e.g. potatoes for crisps)
- Finance – see economic order quantity
A school has space for 500 Students but there are only 450.
What is the
Capacity utilization rate?
450/500 = 0.9 = 90%
What is
cost to buy (CTB) and
cost to make (CTM) for .
Cost to buy refers to outsourcing (buy from others) and Cost to make for doing the work or service inhouse.
For cost to make there are usually fixed cost plus variable cost.
Define R&D?
And what is important to make it effective in a company?
Research and Development – innovation associated with technical development – requires:
- good planning,
- teamwork,
- communication,
- leadership.
- (doesn’t work well with autocratic styles)
Three advantages of
R&D
And the two major problems ?
+
- Open up new markets, competitive advantage
- Enhance company prestige as innovator
- Motivating for the workforce
-
- Cost – development time without any returns
- Risk that there is no market for the product
What are the three types of
Intellectual property rights?
- Patents (e.g. technical or software inventions)
- Copyright (e.g. music)
- Trademarks (name of a brand)
What are the four types of
Innovation ?
Product innovation - where new products are created or improvements to existing products are made
Process innovation - where some parts of the manufacturing or service delivery are improved
Positioning innovation -in the use or perception of a new product or service
Paradigm innovation - so important that it may change the industry itself
What is the difference between
Adaptive & Innovative Creativity ?
Adaptive Creativity:
Use existing solutions for new situations / scenarios
Innovative Creativity
New forms of thinking, unseen solutions that cause radical changes
Four factors that impact a
company’s ability for R & D ?
- Finance – funds available?
- Organization culture – works better in collaborative, democratic structures
- Pace of change – high-tech changes may be too fast, while traditional businesses developing slower
- Ethical – are there concerns about the innovation, e.g. genetic engineering
Others: level of competition, HR, Legal constraints,
What are the three
types of causes that can trigger a crisis?
(with example)
- Human activity (terror, financial crisis)
- Industrial accidents (e.g. Fukushima)
- Natural disasters (earthquakes, droughts)
What are the factors that affect crisis management?
What would that mean for example for crisis such as a explosion in a factory ?
- Transparency and Communication – public stakeholder want to know what is the impact
- Speed and Control– prompt reaction needed to prevent further damage environmental, social, or economic.
Define
Contingency Planning
procedures in place to deal with a future crisis, anticipating it through scenario planning
What are typical measures
in Contingency Planning
- Risk assessments – which crisis is likely to occur for my company and what do we do, when it occurs.
- fire / evacuation drills that prepare staff for an emergency situation
- training (e.g. first aiders)
- communication of procedures to staff, that gives a notion of safety
